<p>Her approach is that the money in a 401K is not counted in the IRA totals when she converts the traditional IRA to a ROTH. If it were, then part of the conversion would be taxable. It’s not just making it simpler, it’s making it not taxable.</p>
<p>I have no current plans to convert the employer 457 plan and pay taxes on those amounts. I just want them to grow tax free. It’s a decent plan with fairly low admin fees and allows you to choose investments as you prefer. I’m ok with paying taxes on the employer account when I have to make required mandatory distributions after I turn 70 in 14+ years. </p>
<p>I want to rollover the traditional IRA that I will already have paid taxes on. I have one small additional Roth IRA at Vanguard, invested in a real estate index fund that seems to be growing nicely that I also plan to leave alone.</p>
<p>3bm103, I have a habit of jumping over in talking. That’s what I meant by simple, simple in the sense you don’t have to pay/file taxes.</p>
<p>HImom, in my case, I am trying to avoid RMD. I forgot why that’s advantageous to us.</p>
<p>
Did all of this money come from rollovers from 401(k) or other company-sponsered plans?</p>
<p>My understanding )which could be wrong) is that you can only roll into a 401(k) or other employer plan if all of the money came from an employer plan. If you ever co-mingled funds within the account, you can’t roll into the employer plan.</p>
<p>
In some cases, it can be a huge advantage. If you don’t need the money to live on, you can leave it in the account to accumulate tax free for your lifetime, as well as leave it to your heirs tax free. Also, with no RMD, you AGI would be lower which would lower your tax rate, and for some, make their SS not taxable. My father’s tax rate went from one of the highest to one of the lowest. He’s very happy.</p>
<p>^I’d be happy, too.</p>
<p>When our income drops in 2014 or 2015, we may consider converting to ROTH IRAs. Expecting high 2013 tax rate.</p>
<p>According to Prudential, manager of the employer 457 plan, can roll pretax IRA to the 457, as long as everything is pretax.</p>
<p>Ok finally think we got it all done. While I was doing it, also got them to change my investments–twice! First time, I used their basket of mutual funds and over the weekend, thought better of it and switched everything this morning so that 40% is in small to mid cap index, 30% is large cap index and the last 30% is bond index. All have negligible .04-.07% administrative fees. </p>
<p>Also got Prudential to conference call the custodian for my IRA with me, so all the paperwork was completed, signed and faxed should finalize by Wednesday. Thursday, I plan to open my new traditional post tax IRA and fund it shortly thereafter. It was not too complicated but each institution needed its own set of forms completed and sent. It was good having the conference call to clear the air and minimize glitches.</p>
<p>I’m in a (relatively) low tax bracket this year compared to last, and am expecting next year to be back up to my higher level. DH is considering retirement in 3-4 years so we’re reviewing our investments. I’ve used several online traditional-to-Roth conversion calculators and have input various tax bracket and inflation assumptions. No matter what the assumption, I calculate almost no benefit to doing the conversion. In most cases I end up losing a substantial amount of money to taxes. </p>
<p>My accountant thinks I should do the conversion of a small amount this year “on faith” (his words) that it will be advantageous in the future.</p>
<p>I’m starting to think this conversion push is an IRS scam to recoup taxes now rather than later.</p>
<p>I’m only rolling over and converting after tax traditional IRA into ROTH account. Have no current plans to roll any pretax iras into a Roth and pay taxes. I am tax averse and prefer not to pay taxes until I HaVE to. :)</p>
<p>HImom yeah, I get the distinction and thus the advantage of a back-door Roth. I don’t have any after-tax IRA contributions, so my rant is a bit off topic. Don’t mind me, just passing through ;)</p>
<p>We have weighed whether to convert the pretax iras to Roth and pay taxes on it to convert. I just couldn’t bring myself to do it. I’m not persuaded paying more taxes is good for us personally right now. We will have high income in 2013. We may have lower income when I turn 70 and need to start making mandatory minimum distributions; the pension will greatly decrease by about 45%, after H dies and he’s significantly older than me.</p>